Tag: shortage

Categories
Economics

[2550] Labor shortage in the palm oil industry

I do not typically post news articles these days, but I think this news article is particularly relevant on one issue that I raised earlier.

MALAYSIA is losing billions of ringgit in palm oil exports because there is not enough foreign workers to harvest fruit bunches in the oil palm fields.

The Malaysian Palm Oil Board (MPOB) estimates that the industry need to hire another 40,000 foreign workers to harvest the riped fruit bunches in order to achieve the 19.3 million tonnes of oil output target.

[…]

“The trees are fruiting, but there’s acute shortage of harvesters and this is affecting the country’s palm oil export earnings,” he told reporters on the sidelines of MPOB seminar titled “Labour – Key Driver For Continued Sustainability of the Oil Palm Industry” held here yesterday.

“If the government approves of another 40,000 foreign workers, we can reduce wastage and surpass the 19.3 million tonne output target easily,” Lee said.

It is estimated that millions of tonnes of fruit bunches rot in the fields because planters are not able to hire enough foreign workers to harvest them. [Labour shortage hits palm oil export earnings. New Straits Times. May 15 2012]

This is the difference between debating from market knowledge with context and theorizing by reading one line in a news article.

Categories
Economics

[1213] Of fight shortage by creating a larger shortage!

Last time, it was sugar shortage and the scapegoats were so-called smugglers and hoarders whereas the real problem was price ceiling. Now, we are having cooking oil shortage. The scapegoats this time? Guess who?

This is getting old. This problem keeps recurring because the root of the problem has not been deal it with; the root cause is the price ceiling. Have we not learned anything from the failure of central planning?

Free the market and the market would solve this shortage by itself.

But no. This time, to shove the problem under the carpet, the government plans to subsidize the production of cooking oil. Or rather, the government is forcing those on the production side to subsidize manufacturers of cooking oil:

KEPONG: The Government has sorted out the shortage of packet cooking oil after assuring the 300 refineries and 30 packers that they would be compensated for their losses.

Plantation Industries and Commodities Minister Datuk Peter Chin Fah Kui said the refineries and packers had also promised to resume supply of the 1kg packet of oil and ensure retailers sell them at or below the ceiling price.

He said to compensate the refineries and packers, the ministry would impose cess on the 4,100 oil palm estates from June 1 until May 31, 2008.

It expects to collect RM661.2mil in taxes for this period. [Compensation to get 1kg oil packets back in shops. The Star. May 9 2007]

Yup sire. Increase the cost of producing palm oil. Impose large enough a tax, the government might even reduce global supply of palm oil!

Less supply for everybody. Brilliant!

Categories
Economics Environment

[1086] Of water shortage, ineffective threat and effective policy

I cannot help but let go a huge sigh when I read a headline entitled “Conserve or face rationing, public told” in The Star on February 8:

PETALING JAYA: Malaysians have been told to start conserving water now or brace themselves for water rationing if the expected hot and dry weather hits the country next month.

Selangor water concessionaire Syarikat Bekalan Air Selangor (Syabas) has sounded out to the state government that rationing was among the steps that would have to be taken if the situation takes a turn for the worse.

Right. Like people are going to listen; I doubt such warning could encourage people to conserve.

When I heard rationing as a possible solution, I rolled my eyes.

I have offered a better plan to survive water shortage, be it caused by El Niño or simple drought, long ago — prices should reflect water scarcity and be allowed to float according to water quantity. In short, with the anticipated water shortage, price must go up throughout the duration of the shortage. In a free market with no state intervention, price would have gone up by now, signally the possibility of shortage.

People will only conserve if something hits them in the head. A mere warning does not cut it but a price increase will do the trick.

I do not know about you but I prefer to pay more rather than not have water at all. Further, rationing is such a drag. Besides, for goodness’ sake, we are living in the 21st century and we are not in a war or something.